MANUAL FOR PANELLISTS

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Copyright: the Baltic Exchange

MANUAL FOR PANELLISTS

A Guide to

Freight Reporting and Index Production

November 2011

The Baltic Exchange St Mary Axe London EC3A 8BH Tel: +44 (0) 20 7369 1625

Fax: +44 (0) 20 7369 1623 Email: [email protected]

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Contents Page No

1 Introduction 4

2 The Core Obligation of Panellists 5 3 Oversight by the Board of Directors 6

4 The Appointment of Panellists 7

5 The Routes 8

a General 8

b Selection of Routes 8

c Route Definitions 8

d Changes to Routes 9

6 Assessment of Rates by Panellists 10

a Assessing Market Information 10

b Age-related factors 12

c Assessing timecharter fixtures concluded on ‘APS’ terms 12 d Extrapolation of implied timecharter rates from Voyage Fixtures 14 e Reporting during Derivative settlement periods 14 7 Limitations of the route assessments 16

8 Quality Control 17

a General 17

b Appointment of Panellists 17

c Quality Control of the Panellists’ Reports 18

d Audit 19

9 Form of Reports and Data Retention 20 10 Calculation of route assessments and Baltic Freight Indices 21 11 Good Practice to Avoid Market Abuse 22

12 Route Notes 23 a 23 b 25 c d 26 26 e 27 f g

Baltic Exchange Panamax Index (BPI) Baltic Exchange Capesize Index (BCI) Baltic Exchange Supramax Index (BSI)

Baltic Exchange Supramax Asia Index (BESA) Baltic Exchange Handysize Index (BHSI)

Baltic Exchange Clean- Dirty Tanker Indices (BCTI & BDTI) and Baltic Exchange International Tanker Routes (BITR-Asia).

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Appendices Page No

1 Directors, Staff and Bodies consulted. 28 2 Appointment and duties of panellists and auditors. 29

3 List of Panellists 31-33

4 Current index route composition 34 A Baltic Exchange Capesize Index 34 B Baltic Exchange Panamax Index 35 C

D

Baltic Exchange Supramax Index Baltic Exchange Supramax Asia Index

36 36 E Baltic Exchange Handysize Index 37 F Baltic Exchange Dry Index 37 G Baltic Exchange Dirty Tanker Index 38-39 H Baltic Exchange Clean Tanker Index 40 I Baltic Exchange International Tanker Routes - Asia 41 J Baltic Exchange Liquified Petroleum Gas Route 41

K Baltic Exchange Sale and Purchase Assessment 42 L Baltic Exchange Demolition Assessment 42 5 Rules governing publication of Baltic Freight Indices. 43 6 Historical note on Baltic Freight Index and examples of index

changes

45 7 Panellists’ Reporting Questionnaire. 56

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Copyright: the Baltic Exchange 1 INTRODUCTION

This manual consolidates the experience of the Baltic in producing freight indices and route assessments. It is intended to assist in ensuring common practice amongst panellists and in training new panellists; in guiding industry users; and in setting out principles which will guide dealings with special circumstances as and when they arise. It offers users quality assurance about the Baltic’s market information products.

This market information is used widely in the underlying physical freight market; as settlement mechanisms for Forward Freight Agreements (FFAs); and in a range of market research and dispute settlement roles.

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Copyright: the Baltic Exchange 2 THE CORE OBLIGATION OF PANELLISTS

The core obligation of panellists is to assess and report a professional judgement of the

prevailing open market level, at their time of reporting on each Baltic index publication day *, for routes defined by the Baltic Exchange.

* Baltic index publication days are notified to the market by the Baltic Exchange.

Limitations of Route Assessments

The Baltic uses reporting panels because there is no independently verifiable ‘right’ or ‘wrong’ rate. Whilst care is taken to ensure the daily route assessments provide a fair valuation of the current market, levels at any particular time are ultimately a matter of judgement.

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Copyright: the Baltic Exchange 3 OVERSIGHT BY THE BOARD OF DIRECTORS

The Baltic Exchange’s freight market information, including all route assessments and the production of its indices, is the responsibility of the Freight Indices and Futures Committee (FIFC). The FIFC, which is responsible to the Board of the Baltic is appointed by the Chairman of the Baltic.

The FIFC regularly consults with the industry to ensure it has the views of:

• Baltic members with relevant expertise, and specifically the panel reporting companies; • The Forward Freight Agreement Brokers’ Association (FFABA);

• The Freight Market Information Users’ Groups (FMIUG) for dry cargo and tankers; • Other exchanges who buy freight market information from the Baltic, amongst others.

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Copyright: the Baltic Exchange 4 THE APPOINTMENT OF PANELLISTS

The Baltic Exchange appoints panel reporting companies in accordance with the following criteria:

• The main business of panellists should be shipbroking. Principals are not considered appropriate panellists;

• Panellists must be recognised as competent, professional firms, actively engaged in the markets they report, with adequate personnel to perform the role of panellist;

• Panellists must be members of the Baltic Exchange, fulfilling all relevant membership criteria; • Panellists must agree to be bound by the standard terms set out in Appendix 2;

• An appropriate geographical spread of panellists is maintained;

• The Baltic seeks to avoid the appointment of panellists who are the exclusive representatives of charterers who are particularly influential in relevant trades.

• Panel reporting companies must nominate a Principal or Representative member of the Baltic as responsible for each index they report on.

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Copyright: the Baltic Exchange 5 THE ROUTES

a General

The FIFC is responsible for the choice of the component routes, and weightings, of the indices, and for any additional freight assessments published by the Baltic.

b Selection of Routes

The FIFC is guided by the following principles in selecting routes:

• The need to produce a basket of routes which is as representative as possible of the world’s principal bulk cargo trades;

• Geographical Balance. Routes reflect trades both within the Pacific and the Atlantic, as well as trades between the oceans (maintaining a balance between fronthaul and backhaul routes); • Liquidity. A steady and significant turnover of fixtures on index routes, or on routes related to

them, is important. Trades subject to seasonal closures (such as the Lakes, or Goa) are avoided;

• Transparency. A reasonable volume of accurately reported fixtures should be available. Where possible, trades dominated by a sole or limited number of charterers are avoided; • Standard Terms. Voyage routes where business is largely concluded on standard terms are favoured;

• Commercial Balance. The BCI consists of a balance of timecharter and voyage assessments, reflecting the underlying market. The BPI, BSI & BHSI consist solely of timecharter routes; and the Baltic Dirty Tanker Index (BDTI) and Baltic Clean Tanker Index(BCTI) reflect

representative clean and dirty wet voyages.

• Number of routes. The Baltic is conscious of the daily workload of panellists, and of the limited number of trades in the market place which fulfil their selection criteria.

c Route Definitions

When the BFI was originally published in 1985, it was conceived as a general measure of the freight market, and the only use made of it in the derivative markets was as a settlement mechanism for the BIFFEX contract. With the development of the Forward Freight Agreement (FFA) trades (‘swaps’), ever closer attention has been paid to the returns for each individual route. This has led the Baltic to favour very tightly defined, and detailed, route descriptions. The Baltic, in consultation with the panellists, and users regularly reviews routes and route

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Copyright: the Baltic Exchange d Changes to routes

The freight market is constantly changing. Previously important trades can lapse into disuse, or be consigned to seldomly relet long-term contracts of affreightment. New trades, and new ship designs become important. The composition of the routes and indices has to reflect changes in the marketplace. At the same time, open derivative contracts for forward settlement based on existing routes limit the speed with which changes can be introduced.

The conventions which have emerged over the years for route changes are:

• Minor changes, which clarify practice, can be introduced without any great time delay, once agreed by the FIFC. Consultation includes the panellists, the FFABA and the FMIUG.

• Any changes to route definitions which would result in an adjustment of rate assessments, have to be agreed by the FIFC. In practice, the FIFC also consult other interested parties such as the FFABA and the FMIUG.

• Route deletions and substitutions, and any changes in the route weightings for the index, have been subject to the same procedure. The mechanisms for the relevant technical computations are set out in Appendix 5. Timing of any changes takes into account representations from the freight derivatives industry.

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Copyright: the Baltic Exchange 6 ASSESSMENT OF RATES BY PANELLISTS

a Assessing Market Information

In reaching their rate assessments, panellists are expected to take into account all relevant market information available to them at the daily reporting time, appropriately adjusted to accord with the route definitions.

Panellists retain discretion to decide the respective importance of the factors they have considered in reaching their assessment.

Panellists will take note of:

• Recently concluded fixtures, making their own judgements in respect of the relevance of the information in the case of business fixed with outstanding subjects, and any unusual contract terms;

• In market circumstances which lead to a particular focus on bunker costs, panellists are expected to consider any additional information regarding speed and consumption which sheds additional light on known fixtures or negotiations. In particular alternative speed and consumption figures, where quoted, (so called "eco speed") should be taken into consideration in establishing market time charter rates. However, the route assessment provided by the panellist to the Baltic remains an assessment only for the Baltic defined vessel;

• Current negotiations, bearing in mind they may frequently be a more immediate reflection of the market than previously concluded business;

• The supply of ships balanced against cargo demand.

Panellists will not normally be influenced by:

• Any assumption about the motivation behind a particular owner’s or charterer’s decision to conclude a specific fixture.

• Movement in the derivatives markets or period market, unrelated to the positions being assessed.

In adjusting fixtures or negotiations which vary from route definitions, panellists are expected to assess the relevance of any deviation from the route definitions. These include:

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• Specification of ships (timecharter routes). Panellists should exercise their judgement as to the relevance or otherwise of any deviation from the standard specification given in the route definitions. This commonly includes deadweight, draft, cubic capacity, age, LOA, speed and consumption.

• Laycan. Where ships are fixed either with laydays commencing before, and/or cancelling dates later than the time specified in the route definitions, panellists are expected to assess the extent to which this is material.

• Delivery and redelivery positions (for timecharter routes). Where delivery and/or redelivery positions fall outside the ranges specified in the route definitions, but are nonetheless

considered relevant to the assessment, panellists should exercise their judgement in respect of the appropriate premium or discount which the market would apply on account of the difference. For example, where a route definition states “delivery A/H for a round voyage redelivery Skaw/Gib” and a ship is fixed on these terms except with redelivery Passero, panellists are expected to judge the market value of the difference.

• Duration (for timecharter routes). Where fixtures are concluded which, in the panellists’ judgement, fall outside the route definition, panellists are expected to assess the significance of any deviation. This is particularly important when ships are fixed from strong areas to weak areas and vice versa, but may also be relevant when business is fixed on a point to point basis, for example T/A rounds or T/P rounds, at a time when the market structure reflects expectation of market movement such as seasonal strength or weakness.

• Commission. Route definitions state the commission at which the business is expected to be quoted by usual channels to active market participants. As such, panellists are expected to make allowance for any variation in the rate of commission, for example increased or reduced address commissions at which the business is quoted in the market.

• Load/discharge terms (voyage charters). Where these differ from the route descriptions, panellists should assess the value the market places on any variation.

• Load/discharge ports (voyage charters). Where fixtures are concluded from load or discharge ports which are outside the route definitions, but deemed relevant to them, panellists must assess the market significance of the difference. This will normally reflect factors such as port costs, relevant drafts, extra/reduced steaming, and the value or otherwise of geographical position.

• Cargo size/type (voyage charters). Where cargoes are fixed for quantities which fall outside the specified margins /specifications of the route description, or for types of cargo which usually command a premium or discounted rate, panellists are expected to make an

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should not modify reported rates to take account of the actual quantity of cargo expected to be loaded, provided it comes within the route specification.

• Material deviation from normal charter terms. If the panellists are aware of any charterparty term that is materially at variance with the market norm, they are entitled to make an

appropriate adjustment.

b Age - related factors

Definitions for all timecharter routes, and some voyage routes, stipulate a maximum age.

In noting any market activity that is transacted by ships that are older than a specified

maximum, panellists are expected to use their discretion in adjusting these rates to the route definitions.

Where voyage routes do not stipulate a maximum age, panellists are expected to make an allowance for any extra insurance premium payable by an owner. (Also see notes in respect of Route 1 on page 15).

Where voyage routes stipulate a maximum age, panellists are expected to make an allowance for any extra insurance premium payable by a charterer. (Also see notes in respect of route 2 on page 16).

c Assessing timecharter fixtures concluded on APS terms

Route definitions make certain assumptions about delivery positions which are not always reflected in the terms of fixtures concluded in the market. For example, a route definition may call for a rate based on delivery South Korea/Japan range for a Pacific round voyage with redelivery South Korea/Japan, whereas in practice ships may be fixed with delivery arrival pilot station (APS) Australia (or NOPAC) at a fixed rate of hire with or without a ballast bonus.

Panellists take due account of all such market activity, exercising their professional judgement in assessing the relevance of such information to their daily returns.

Panellists are entitled (and expected) to take a number of factors into account including: • The timecharter equivalent (see following section) of the reported fixture, on the basis of the

route definition. In making this assessment, panellists exercise discretion in determining applicable bunker prices, the duration of paid leg, and appropriate allowances (such as a bad weather allowance) to the ballast leg;

• The extent to which the fixture is relevant to the route in question. Factors to be considered include the incidence of such fixtures relative to fixtures on such route definitions; where the ship ballasted from; and the probability of actually being able to conclude business at the timecharter equivalent rate. Similar principles apply when ships are fixed on ‘APS’ terms with

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no ballast bonuses. Typically the fixtures are concluded at apparently high rates which need adjusting to take account of ballast time and expenses incurred by owners.

In summary, such fixtures can be expected to form a persuasive but not necessarily definitive element in route assessments.

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Copyright: the Baltic Exchange Timecharter Equivalent Calculations

In assessing timecharter equivalent yields, net income less costs is divided by total round voyage duration, where:

• Net income equals (net daily hire rate x days on hire) plus net ballast bonus if any.

• Cost is the cost of bunkers consumed plus any other relevant expenses on ballast passage. • Total duration is the ballast time plus days on hire.

The resulting net figure is then grossed up by the relevant commission to give the applicable gross round voyage equivalent.

d Extrapolation of implied timecharter rates from Voyage fixtures

Occasions arise when there is a lack of underlying fixing on timecharter terms in trades covered by timecharter route descriptions, even though comparable trades are being fixed on voyage basis. On other occasions the reverse will be true.

In these circumstances, panellists are encouraged to consider the timecharter equivalent returns of the voyages being fixed, or alternatively the implied voyage rate for a timecharter fixture, and to take this assessment into account in deciding their returns.

However, it is recognised that, just as voyage estimating varies amongst principals, so too will it vary between panellists and, in addition, it is recognised that such assessments will seldom be the only factors influencing the panellists’ returns.

All panellists are expected to be able to demonstrate competence in voyage estimating.

e Reporting during Derivative settlement periods

Some derivative positions for dry contracts are settled against route returns for the last days of any month. Occasions have arisen when it has been suggested that the physical market is being affected by principals seeking to influence panel returns, and hence the settlement rate which will be applied to their FFA positions. In such circumstances, panellists need to exercise special care, always being guided by the general principles of reporting. They should

particularly bear in mind the following points:

• Panellists are entitled to take into consideration all relevant market information. Whilst panellists will give due weight to reported fixtures, they are not bound to return a ‘last fixed’ rate if, in their opinion, other factors, such as tonnage offering below last done, or charterers bidding higher, suggest the fixture no longer represents the market;

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• When business is concluded at varying rates, panellists are entitled to exercise their discretion in determining the relative influence of each fixture to their returns;

• Fixtures which have not been fully concluded but which are subject to outstanding approvals should be assessed appropriately.

• If panellists are aware of any outside party directly attempting to influence their returns, the matter should be reported to the Baltic Freight Market Reporter.

• Panellists are not expected to consider the motives underlying any bona fide, properly reported market activity.

The Baltic Exchange encourages all industry participants to openly and accurately report all market activity.

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Copyright: the Baltic Exchange 7 LIMITATIONS OF THE ROUTE ASSESSMENTS

Whilst every care is taken to ensure the daily route assessments provide a fair valuation of the current market, the Baltic Exchange draws the market’s attention to the following factors:

• The underlying freight market consists of frequently unrelated fixtures concluded between principals, each of which may involve different terms, and different market judgements. The panel’s assessment of this activity, and of continuing but as yet unconcluded negotiations, inevitably results in ‘averaging’.

• Underlying physical activity for particular routes, or reports of such activity, may be limited or non-existent at any particular time. In these circumstances, panellists exercise judgements which cannot be tested against current negotiations or fixtures.

• In fast moving markets, it is inevitable that some panellists will become aware of important information ahead of other panellists or market participants. Similarly, market participants may, on occasion, be aware of information ahead of the panel. It may therefore take more than a day for market moves to be fully represented in panel returns.

Reporting panels exist because, ultimately, there is no independently verifiable ‘right’ or ‘wrong’ rate for index routes. Market levels at any particular time are a matter of judgement.

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Copyright: the Baltic Exchange 8 QUALITY CONTROL

a General

It is no coincidence that the Baltic Exchange’s freight indices and route assessments have an unrivalled standing in the industry. The Baltic Exchange’s reputation for high standards, independence and integrity is recognised throughout the world. It is uniquely placed to co-ordinate co-operation between market participants who in other spheres of activity compete.

Quality control of the route assessments and indices falls into three categories as set out below:

b Appointment of Panellists

The criteria for appointment of panellists is set out in section 4. On appointment to a panel the shipbroking firm commits to:

• Acknowledge in writing acceptance of the index rules.

• Continuing to satisfy the Baltic Exchange as to its competence and suitability to report rates.

• Carry out a process of self-assessment at regular intervals during its appointment having regard to relevant factors, such as the number of shipbrokers in their employment with special knowledge and experience on each route being reported.

• Appoint a representative principal and deputy who are responsible to the Baltic Exchange for the performance of their firm’s obligations as panellists. Such brokers shall have the expertise acceptable to the Baltic Exchange and will be replaced if so required by the Baltic Exchange.

• Disclose to the satisfaction of the Baltic the manner in which it participates in any form of freight derivatives trading (whether as broker or principal), always bearing in mind that any panellist, or any employee of the panellist, may have direct or indirect interests in freight derivatives.

• Accept that all information provided by the panellist to the Baltic Exchange or the index auditor remains confidential between the panellist and the Baltic Exchange.

• Submit to an annual audit conducted on behalf of the Baltic Exchange’s freight index auditor, Moore Stephens, or their nominee, and to spot checks of the panellists’ reporting procedures.

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Copyright: the Baltic Exchange c Quality Control of the Panellists’ Reports

Panellists’ reports are monitored on a daily basis by the Baltic’s Freight Market Reporters and panel reporting companies are visited for a quality audit by the Baltic Freight Reporter or his representative at least once a year.

The Directors regularly receive reports from the Baltic Freight Market Reporter on the quality of panellists’ returns.

The Baltic Freight Market Reporter agrees with panel reporting companies which routes they will report.

The Baltic Exchange regularly reviews and analyses the range of reports received each day, always bearing in mind that any review is carried out with the benefit of hindsight.

These reviews are conducted confidentially.

The Baltic Freight Market Reporter also compiles the Baltic daily dry cargo fixture list for

members. The Reporter thus receives market reports which maybe made available to panellists. Additionally the Reporter liaises with any party wishing to comment on the daily assessments. Panellists may be informed of any observations received by the Baltic but remain obliged to make their own judgements on any such observations in their next return.

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Copyright: the Baltic Exchange d Audit (See also Appendix 2)

The principal objectives of the external annual audit carried out by the Baltic Exchange index auditors, Moore Stephens, or their nominees, are to ensure that:

• The Baltic indices and routes are accurately calculated from the daily returns submitted by the reporting panellists.

• Moore Stephens is prepared to take over the calculation of the daily indices from the Baltic Exchange if required.

• The panellists are complying with terms and conditions of their appointment.

The following duties are discharged by Moore Stephens:

• Quarterly re-calculation of the indices as a cross check of the program used by the Baltic.

• Confirmation that in the event of any major disaster, they can calculate the indices on their system.

• Confirmation that all panellists have been audited for quality within the previous twelve months by the Baltic Exchange to ensure compliance with the terms and condition of their appointment as panellists.

• Ensuring that the annual panellist’s reporting questionnaire has been received from all panellists. A copy of the questionnaire is shown in Appendix 7.

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Copyright: the Baltic Exchange 9 FORM OF REPORTS AND DATA RETENTION

Reports must be submitted in the format specified by the Freight Market Reporter.

Panellists must maintain their own record of their reports for twelve months, and be in a position to justify them to the Baltic Freight Market Reporter, or to the auditors.

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Copyright: the Baltic Exchange 10 CALCULATION OF ROUTE ASSESSMENTS AND BALTIC FREIGHT INDICES

The calculation of the daily route assessments, and the Baltic freight indices is the responsibility of the Baltic Exchange, utilising the returns of the panellists.

From early September 2002, all dry cargo panellists’ route returns have been included in the average. Prior to this, both the highest and lowest were excluded. The indices are calculated in accordance with the rules set out in Appendix 5, adjusted to take account of the weighting factors set by the Baltic Exchange from time to time.

For BDTI and BCTI assessments, all returns (including the highest and lowest) have always been included in the calculations.

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Copyright: the Baltic Exchange 11 GOOD PRACTICE TO AVOID MARKET ABUSE

Neither the Baltic Exchange nor its employees are permitted to trade in any freight derivatives market. They must not make available any information concerning panel reports which refer to specific panellists or would allow a panellist to be identified to any party outside the staff of the Baltic, or in special circumstances, the Directors of the Baltic.

No restrictions are placed on panel companies or their employees, acting either as brokers for, or as principals in, the freight derivative markets. However, it is a condition of appointment that panel companies and the relevant employees disclose to the Baltic Exchange their involvement in the derivative markets. Similarly, the information available to staff in the course of their duties must not be passed or otherwise made available outside the Baltic, except in reports of quality assurance to the Baltic Exchange Board of Directors.

Daily reports from panellists are strictly confidential between the Baltic Exchange and the nominated representative of the panel company. Panellists are bound by the confidentiality clauses in the letter of appointment. Their daily reports must not be made available to anyone else. This includes other staff or departments in the company, and in particular to any

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Copyright: the Baltic Exchange 12 ROUTE NOTES

General

Panellists are reminded that the elected port or ports for load or discharge in the route description must be the ones on which they base their assessments. This is particularly

important when for whatever reason freight premiums are obtained over and above other ports in the area.

In the event of port closure, the FIFC would have to be convened at the earliest opportunity to assess the situation.

a Baltic Exchange Panamax Index

• All routes are as “always afloat except where NAABSA is customary and within iwl” and based on the Baltic Panamax vessel description.

Route 1 - SUSPENDED

Stowage Factor (SF). The route description specifies a stowage factor of 55 ft whereas in practice ships are frequently fixed with SF of 49 ft (and on occasions less). Panellists should ensure that their rate assessments are adjusted to take into account varying stowage factors. The following standard calculation to convert fixture based on 49 ft SF to the equivalent at 55 ft SF should be used:

(i) Divide grain cubic of vessel by 49 to determine cargo intake.

(ii) Multiply cargo intake by agreed freight rate to determine lumpsum freight. (NB. If fixture concluded on lumpsum basis ignore steps (i) and (ii)).

(iii) Divide grain cubic of vessel by 55 to determine adjusted cargo intake.

(iv) Divide lump sum freight by result of (iii).

Overage insurance premiums. Panellist’s attention is drawn to the separate general in note 6b (Age related factors – page 9) which is particularly relevant on this trade.

Specification of loading elevator in fixture terms. Where a fixture specifies a particular loading installation which is either more or less favourable to an owner, panellists should allow for this in assessing their returns.

Route 1a

Fixtures concluded on APS terms. Panellists’ attention is drawn to the general note 6c. (Assessing Time charter fixtures concluded on APS terms – page 9).

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In assessing the relevance of these fixtures, panellists will normally consider whether the market structure assumes vessels will ballast into the US Gulf, or whether it assumes vessels have carried cargo into the area, and may make rate adjustments accordingly.

Panama draft. In normal circumstances cargoes fixed on this route will be routed via Panama. However, this is not specified in the route description.

The actual lift of a vessel via Panama, provided it falls within the route definition, is not of relevance to rate assessment. Where the cargo size falls outside the route definition, panellists should make an appropriate adjustment.

In exceptional circumstances the water levels in the Panama Canal can fall to such an extent that panamaxes cannot lift the described quantity and sail via Panama. In these circumstances charterers are faced with a choice of loading full cargoes and sailing via the Cape of Good Hope, or fixing cargoes via Panama Canal, either in panamax vessels cutting size, or in smaller vessels. Panellists will then be guided by the freight rate which most closely relates to the route description, making any appropriate adjustment.

• Combination discharge. The route description calls for rates based on ‘non combination discharge port’ terms. Where fixtures are concluded with combination discharge terms, or where there is no option of combination discharge, an appropriate adjustment should be made by panellists.

• Alternative discharge destinations. Panellists reporting this route are expected to be aware of, and apply, appropriate adjustment factors to equate fixtures for discharge at other far eastern destinations, to Japan.

• Specification of loading elevator. See notes on Route 1 on page 15.

• Loadport. Panellists should note that loading is specified as Mississippi. Should fixtures be concluded from alternative US Gulf loadports, rates should be adjusted in accordance with prevailing market differentials.

• Age. By convention, this route is reported on the basis of ‘maximum 15 years’ (Also see section 6b – age related factor – on page 9).

• Specification of loading elevator. See Route 1. In particular panellists are asked to assess the additional cost to an owner in cases where loading is stated to be from unusually expensive elevators in the Colombia River.

• Cargo and trading exclusions. Whilst no specific cargo and trading exclusions are included in route descriptions, panellists will be aware of market norms at any time. Where fixtures have been concluded at rates which may appear to be particularly high (or low) because

exceptional flexibility has been given to charters (or exceptions restrictions imposed on them), panellists will use their judgement to make appropriate adjustments.

• Disbursement variation due to vessel’s flag. Where fixture rates vary because of the flag of the ship, panellists will adjust their returns to reflect the market for non FOC ships, which are charged standard port disbursements. This is principally of relevance in trades covering FSU.

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Copyright: the Baltic Exchange b Baltic Exchange Capesize Index

• All routes are as “always afloat within iwl” and based on the Baltic Capesize vessel description.

Route 3

• Disbursements. Panellists should report on the basis of normal port disbursements at load and discharge ports. This figure is subject to periodic review by the Baltic and is usually guided by the underlying annual Contracts of Affreightment (COAs) contracted by the shippers/receivers.

Route 5

• Disbursements. See Route 3.

Route 9

• Delivery position. Panellists should note that ships fixed with delivery West of Passero up to, but not including, Antwerp have not delivered in accordance with the route description. These positions are often more favourable to charterers as they are closer to most loadports. Panellists are expected to take this into account in adjusting fixtures to index terms.

Route 11

• Redelivery position. Panellists should note that ships fixed with redelivery West of Passero up to Antwerp have not redelivered in accordance with the route description. These positions are often more favourable to owners as they are closer to most subsequent loadports. Panellists are expected to take this into account in adjusting fixtures to index terms.

Route12

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Copyright: the Baltic Exchange c Baltic Exchange Supramax Index

• All routes are as “always afloat within iwl” and based on the Baltic supramax vessel description.

• Each route is based on laydays about 5 days after the date of the index, with cancelling about 10 days thereafter. The routes will not be limited by specific cargo descriptions.

• In the absence of transatlantic round voyage activity, panellists must take their guidance from outwards and homewards fixtures taking particular regard to combined duration and any ballasting between employment.

d Baltic Exchange Supramax Asia Index

• All routes are as “always afloat within iwl” and based on the Baltic supramax vessel description.

• In the absence of transatlantic round voyage activity, panellists must take their guidance from outwards and homewards fixtures taking particular regard to combined duration and any ballasting between employment.

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Copyright: the Baltic Exchange e Baltic Exchange Handysize Index

• All routes are as “always afloat within iwl” and based on the Baltic handysize vessel description.

•Route HS1/HS2 - With a delivery of Skaw-Passero this covers both Mediterranean and Continent markets. There will inevitably be fluctuations in the relative strengths between these areas and when this occurs panellists are expected to average their returns to reflect the overall value within the delivery range.

f Baltic Exchange Dirty Tanker Index, Baltic Exchange Clean Tanker Index and Baltic International Tanker Routes – Asia.

• Rate assessments are quoted in Worldscale rates (Copyright Worldscale Association) or dollar per ton. The Baltic Exchange does not take responsibility for the conversion of Worldscale rates into monetary values.

• End of year worldscale change.

Panellists are required to report their assessments according to the current worldscale rates prevailing up to the last reporting day of the year. Thereafter the next year's worldscale rates will apply.

• Panellists are reminded that the elected port or ports for load or discharge in the route description must be the ones on which they base their assessments. This is particularly important when for whatever reason freight premiums are obtained over and above other ports in the area.

In the event of port closure, the FIFC would have to be convened at the earliest opportunity to assess the situation.

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Copyright: the Baltic Exchange Appendices

APPENDIX 1

Directors, staff and bodies consulted.

The Board of Directors exercise its responsibility through the Freight Indices and Futures Committee (FIFC). The following Directors serve on this committee as at June 2011:

G M Campbell (Chairman) D L Dunn

H J Fafalios M Robson C A Fowle

The indices are compiled and quality checked by the following staff: W. Lyth Senior Freight Market Reporter P. Jones Freight Market Reporter

P. Swayne Freight Market Reporter B. Wooderson Freight Market Reporter P. Williams Freight Market Reporter M. Ackerman Freight Market Analyst

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Copyright: the Baltic Exchange APPENDIX 2

Appointment and duties of panellists and auditors

1 Terms and Conditions of Appointment of freight market panellists.

No firm shall be appointed a panellist or continue to be a panellist unless the firm:

(a) Satisfies and, whenever required to do so, continues to satisfy the Baltic Exchange as to the suitability and competence of the firm to report rates on the routes of the index. (b) Is a member of the Baltic Exchange, being such category of membership as may be

decided by The Baltic from time to time.

(c) Undertakes in writing having notice of the duties of panellists, as may be amended from time to time, and undertakes to perform the task of panellist diligently.

The Panellist shall be appointed for a period of one year. That appointment may be renewed by the Baltic Exchange for a further period or periods of one year thereafter.

The appointment of a panellist may be terminated by either party giving to the other not less than one year’s notice in writing so as to expire at the end of any calendar month. In addition, the Baltic Exchange may terminate the appointment of the panellist by summary notice in writing if the panellist shall have committed any serious breach or repeated or continued (after warning) any material breach of its obligations as a panellist.

2 Duties of Panellists

For the purposes of assessing suitability and competence of a firm to be a panellist or to continue to be a panellist the Baltic Exchange require the firm to apply a process of self-assessment prior to consideration of the firm for appointment, at regular intervals during an appointment and prior to an appointment being renewed having regard to a number of factors that may be considered relevant, such as:

i) The number of shipbrokers with shipbroking experience acceptable to the Baltic Exchange who have special knowledge and experience on each route.

ii) The firm’s desire not to report on certain of the routes if it does not have sufficient personnel with adequate experience.

iii) The location of the firm and its ability to report before 1230 (London) time for dry cargo routes, before 1530 (London) for the Baltic Liquified Petroleum Gas Route assessment, before 1530 (London) for the Baltic Palm Oil assessment, before 1530 (London) hours for tanker indices, before 1430 (Singapore) for the BES-Asia Route Assessments and before 1530 (Singapore) for the BITR-Asia Route Assessments.

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Responsibility for providing data for the voyage and trip-timecharter routes should be allocated to individual brokers in each panel company who have special knowledge of the specific trade. If practicable, deputies to these brokers also to be nominated and this to be recorded in-house. If the prime broker is not available the deputy will automatically take over. The procedure is not in any way meant to restrict the panellists’ flexibility to change brokers responsible, merely to ensure that adequate records are kept of such changes.

The representative principal of the panellist listed with the Baltic Exchange is to have a nominated deputy in his absence. The principal or his deputy or nominee named to the Baltic Exchange should oversee the daily report for errors of omission, transmission, etc. before it is sent to the Baltic Exchange. A nominee from each panellist to be available daily between 1200 and 1300 hours London time to resolve any queries raised by the Baltic Freight Market Reporter regarding the dry cargo routes, between 1500 and 1600 London time for the tanker indices, liquified petroleum gas & palm oil route assessments and between 1500 and 1600 Singapore time for the BITR-Asia route assessments.

The representative principal will view the report sent each day to confirm that after making all necessary enquiries he believes it to be the best assessment of the rates on that day.

3. Audit

The procedure falls into two categories:

1 The statutory annual audit carried out on behalf of the indices auditors – Moore Stephens – by a member of the Baltic staff includes:

a Confirmation of the names of the panellists’ principal reporting broker(s). b The names of individual reporting brokers/deputies.

c Disclosure to the satisfaction of the Baltic of the extent of any involvement in freight derivatives business.

2 Examination of panellist’s competence to report on index routes is carried out

continuously, as well as in the course of the statutory annual audit. Input from panellists is monitored daily for accuracy. Where necessary graphs of rates from individual

panellists compared to others and to the index rates are produced and discussed with panellists. There is strong emphasis on specialisation of input by panellists and not all the Baltic index panellists report on all index routes.

Reports of both aspects of the auditing procedures are submitted to the Baltic Exchange for discussion and possible further action. The Baltic Exchange also reviews, from time to time, the route definitions and weightings ensures that they are kept up-to-date to reflect both the physical trades and the needs of the market for freight information.

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Copyright: the Baltic Exchange APPENDIX 3 - List of panellists

BALTIC EXCHANGE CAPESIZE INDEX PANELLISTS

Arrow Chartering (UK) Ltd Banchero-Costa & C s.p.a Barry Rogliano Salles Chinica Shipbrokers Ltd Clarksons

Fearnleys A/S

E A Gibson Shipbrokers Ltd Howe Robinson & Co Ltd Ifchor SA

Ildo Chartering Corporation LSS B

Neo Chartering

Simpson Spence & Young Ltd Thurlestone Shipping Ltd

BALTIC EXCHANGE PANAMAX PANELLISTS

Acropolis Chartering & Shipping Inc. Arrow Chartering (UK) Ltd

Banchero-Costa & C s.p.a Barry Rogliano Salles Braemar Seascope Chinica Shipbrokers Ltd Clarksons Fearnleys A/S GFI Brokers Ltd E A Gibson Shipbrokers Ltd Hai Young Int.

Howard Houlder (Dry Cargo) Ltd Howe Robinson & Co Ltd

Icap Shipping Ltd Ifchor SA

John F Dillon & Co

Lawrence (Chartering) Ltd LSS F Maersk Broker Neo Chartering Optima Chartering Thurlestone Shipping Ltd Simpson Spence & Young Ltd Yamamizu Shipping Co Ltd

BALTIC EXCHANGE SUPRAMAX INDEX PANELLISTS

Ausea Beijing

Barry Rogliano Salles Clarksons

L Dens (Shipbrokers) Ltd Lightship Chartering A/S Howe Robinson & Co Ltd Ildo Chartering Corporation Icap Shipping Ltd

John F Dillon & Co Maersk Broker

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Rigel Shipping

Simpson Spence & Young Ltd Yamamizu Shipping Co Ltd

BALTIC EXCHANGE SUPRAMAX ASIA INDEX PANELLISTS

Ausea Beijing

Barry Rogliano Salles (Asia) Clarksons (Asia)

Galbraith’s Shanghai

Howe Robinson & Co (Asia) Icap Shipping Singapore Ildo Chartering Corporation Interocean Delhi

Lightship Chartering Singapore Pte Ltd P. C. Li Shipbrokers Ltd

Simpson Spence & Young (Asia) Yamamizu Shipping Co Ltd

BALTIC EXCHANGE HANDYSIZE INDEX PANELLISTS

Ausea Beijing

Barry Rogliano Salles Braemar Shipbrokers Clarksons

Clarkson Asia Pte Ltd (Singapore) Doric Shipbrokers S.A.

Lawrence Chartering Ltd Lightship Chartering A/S Howe Robinson & Co Ltd HSBC Shipping Services P. C. Li Shipbrokers Ltd Rigel Shipping

Simpson Spence & Young Ltd Vogemann

Yamamizu Shipping Co Ltd

BALTIC CLEAN AND DIRTY TANKER ROUTES PANELLISTS

A C M Shipping Ltd Barry Rogliano Salles Bassoe (PF)

Braemar Seascope Ltd Bravo Tankers

Icap Shipping Ltd

Charles R. Weber Company Inc. Clarksons

Clarkson Asia Pte Ltd (Singapore) Eastport Chartering Pte Ltd Fearnleys A/S

Galbraith’s Ltd

E A Gibson Shipbrokers Ltd Island Shipbrokers

Mallory Jones Lynch Flynn & Assoc. Inc McQuilling Brokerage Partners Inc (New York) McQuilling Brokerage Partners Inc (Singapore) Odin Marine (Singapore)

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Simpson Spence & Young Ltd

Simpson Spence & Young (Singapore) True North Chartering LLC

BALTIC INTERNATIONAL TANKER ROUTES – ASIA

ACM Shipping Ltd

Eastport Chartering Pte Ltd Clarkson Asia Pte Ltd (Singapore) Island Shipbrokers

McQuilling Brokerage Partners Inc (Singapore) Odin Marine (Singapore)

Simpson Spence & Young (Singapore)

BALTIC LIQUIFIED PETROLEUM GAS ROUTE PANELLISTS

ACM Shipping Ltd Braemar Seascope Ltd Clarksons

Fearnleys A/S

E A Gibson Shipbrokers Ltd Lorentzen & Stemoco Poten & Partners (UK) Ltd Inge Steensland

BALTIC SALE AND PURCHASE PANELLISTS

ACM Shipping

Arrow Chartering (UK) Banchero-Costa Barry Rogliano Salles Compass Maritime Services Fearnleys

Lorentzen & Stemoco Mallory Jones Lynch Flynn Optima Shipbrokers R S Platou Shipbrokers

SSY Valuation Services Limited Yamamizu Shipping

BALTIC DEMOLITION PANELLISTS

ACM Singapore

Compass Maritime Services Clarksons

JV Shipping

Optima Shipbrokers

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Copyright: the Baltic Exchange APPENDIX 4

CURRENT INDEX ROUTE COMPOSITION

APPENDIX 4 (A)

Baltic Exchange Capesize Index

Route C2

Tubarao/Rotterdam 160,000 long tons 10 per cent iron ore free in and out, 6 days Sundays holidays included, 6 hours turn time at loading port and 6 hours turn time at discharge port, 0.5% in lieu of weighing. Laydays 20 days forward from date of index,

cancelling maximum 35 days forward from date of index. Vessel’s age max. 18 years. Freight based on long tons. 3.75 per cent total commission.

Nominal Weighting =10%

Route C3

Tubarao/Qingdao, 160,000 mt 10 per cent iron ore free in and out, 18m salt water arrival draft, scale load/30,000 mt Sundays holidays included discharge. 6 hours turn time at loading port, 24 hours at discharge port. Laydays 20 days forward from date of index, cancelling maximum 35 days forward from date of index. Vessel’s age max. 18 years. Freight based on metric tonnes. 3.75 per cent total commission.

Route C4

Richards Bay/Rotterdam, 150,000 mt 10 per cent coal free in and out and trimmed, scale load/25,000 mt Sundays holidays included discharge. 18 hours turn time at loading port and 12 hours at discharge port. Laydays 25 days forward from date of index, cancelling 40 days forward from date of index. Vessel’s age max. 15 years. Freight based on metric tonnes. 3.75 per cent total commission. Nominal Weighting =5%

Route C5

W Australia/Qingdao, 160,000 mt 10 per cent iron ore free in and out, 18m salt water arrival draft, scale load/30,000 Sundays holidays included discharge, 6 hours turn time at loading port and 24 hours at discharge port. Laydays 20 days forward from date of index, cancelling max. 35 days forward from date of index. Vessel’s age max. 18 years. Freight based on metric tonnes. 3.75 per cent total commission.

Route C7

Bolivar/Rotterdam 150,000 mt 10 pct coal free in and out trimmed, 50,000 mt Sundays holidays included loading/25,000 mt Sundays holidays included discharge, 12 hours turn time at loading port and 12 hours turn time at discharge port. Laydays 20 days forward from date of index, cancelling maximum 35 days forward from date of index. Vessel’s age maximum 15 years. 3.75 per cent total commission.

Route C8 03

Delivery Gibraltar-Hamburg range, 5-15 days ahead of the index date, trans Atlantic round voyage duration 30-45 days, redelivery Gibraltar-Hamburg range. 3.75 per cent total commission. Based on a Baltic capesize of the following specifications: 172,000 mt dwt, not over 10 years of age, 190,000 cbm grain, max loa 289m, max beam 45 mtrs, draft 17.75 mtrs, 14.5 knots laden, 15.0 knots ballast on 56 mts fuel oil, no diesel at sea.

Route C9 03

Delivery Amsterdam-Rotterdam-Antwerp range or passing Passero, 5-15 days ahead of the index date, redelivery China-Japan range, duration about 65 days. 3.75 per cent total commission. Based on a Baltic capesize of the following specifications: 172,000 mt dwt, not over 10 years of age, 190,000 cbm grain, max loa 289m, max beam 45 mtrs, draft 17.75 mtrs, 14.5 knots laden, 15.0 knots ballast on 56 mts fuel oil, no diesel at sea.

Route C10 03

Delivery China-Japan range, 5-15 days ahead of the index date, round voyage duration 30-40 days, redelivery China-Japan range. 3.75 per cent total commission. Based on a Baltic capesize of the following specifications: 172,000 mt dwt, not over 10 years of age, 190,000 cbm grain, max loa 289m, max beam 45 mtrs, draft 17.75 mtrs, 14.5 knots laden, 15.0 knots ballast on 56 mts fuel oil, no diesel at sea.

Route C11 03

Delivery China-Japan range, 5-15 days ahead of the index date, redelivery Amsterdam-Rotterdam-Antwerp range or passing Passero, duration about 65 days. 3.75 per cent total commission. Based on a Baltic capesize of the following specifications: 172,000 mt dwt, not over 10 years of age, 190,000 cbm grain, max loa 289m, max beam 45 mtrs, draft 17.75 mtrs, 14.5 knots laden, 15.0 knots ballast on 56 mts fuel oil, no diesel at sea.

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APPENDIX 4(B)

Baltic Exchange Panamax Index

Route P1a 03

Basis a Baltic panamax 74,000 mt dwt not over 12 years, 89,000 cbm grain, max LOA 225m, draft 13.95m, 14.0 knots on 32mts fuel oil laden, 28mts fuel oil ballast and no diesel at sea. For a trans Atlantic (including ECSA) round of 45/60 days on the basis of delivery and redelivery Skaw-Gibraltar range. Loading 15-20 days ahead in the loading area. Cargo basis grain, ore, coal, or similar. 3.75 per cent total commission.

Route P2a 03

Basis a Baltic panamax 74,000 mt dwt not over 12 years of age, 89,000 cbm grain, max loa 225m, draft 13.95m, 14.0 knots on 32mts fuel oil laden, 28mts fuel oil ballast and no diesel at sea, basis delivery Skaw-Gibraltar range, for a trip to the Far East, redelivery Taiwan-Japan range, duration 60/65 days. Loading 15-20 days ahead in the loading area. Cargo basis grain, ore, coal, or similar. 3.75 per cent total commission.

Route P3a 03

Basis a Baltic panamax 74,000 mt dwt not over 12 years of age, 89,000 cbm grain, max loa 225m, draft 13.95m, 14.0 knots on 32mts fuel oil laden, 28 mts fuel oil ballast and no diesel at sea, for a trans Pacific round of 35/50 days either via Australia or Pacific (but not including short rounds such as Vostochny/Japan), delivery and redelivery Japan/South Korea range. Loading 15-20 days ahead in the loading area. Cargo basis grain, ore, coal or similar. 3.75 per cent total commission.

Route P4 03

Basis a Baltic panamax 74,000 mt dwt not over 12 years of age, 89,000 cbm grain, max loa 225m, draft 13.95m, 14.0 knots on 32mts fuel oil laden, 28 mts fuel oil ballast and no diesel at sea, delivery Japan-South Korea range for a trip via US West Coast-British Columbia range or Australia, redelivery Skaw-Passero range, duration 50/60 days. Loading 15/20 days ahead in the loading area. Cargo basis grain, petroleum coke, coal or similar. 3.75 per cent total commission.

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APPENDIX 4(C)

Baltic Exchange Supramax Index

The Baltic Exchange Supramax Index is based on the following description: Standard "Tess 52" type vessel with grabs as follows:

• 52,454 mt dwt self trimming single deck bulkcarrier on 12.02 m ssw • 189.99 m LOA 32.26 m Beam 5ho/ha 67,756 cum.grain 65,600 cum.bale • 14L /14.5B on 30mt (380 cst) no mdo at sea

• Cr 4 x 30 mt with 12 cum grabs • Maximum age - 10 years

Route definitions Route 1A

Delivery Antwerp/Skaw range for a trip of 60/65 days redelivery Singapore/Japan range including China 5 per cent total commission. Laycan 5/10 days in advance. Weighting 12.5 per cent.

Route 1B

Delivery passing Canakkale for a trip of 50/55 days redelivery Singapore/Japan range including China 5 per cent total commission. Laycan 5/10 days in advance. Weighting 12.5 per cent.

Route 2

Delivery South Korea/Japan range for 1 Australian or trans Pacific round voyage, for a 35/40 day trip, redelivery South Korea/Japan range 5 per cent total commission. Laycan 5/10 days in advance.

Weighting 25 per cent.

Route 3

Delivery South Korea/Japan range for a trip of 60/65 days redelivery Gibraltar/Skaw range 5 per cent total commission. Laycan 5/10 days in advance.

Weighting 25 per cent.

Route 4A

Delivery US Gulf for a trip about 30 days, redelivery Skaw – Passero range, 5 per cent total commission. Laycan 5/10 days in advance.

Weighting 12.5 per cent.

Route 4B

Delivery Skaw – Passero range for a trip about 30 days, redelivery US Gulf, 5 per cent total commission. Laycan 5/10 days in advance.

Weighting 12.5 per cent.

Route 5

Delivery Dakar/Douala range for a trip via East Coast South America of 60/65 days, redelivery Singapore/Japan range, 5 per cent total commission. Laycan 5/10 days in advance. (Route S5 does not contribute towards the BSI or TC Average)

Route 9

Delivery Dakar/Douala range for a trip via east coast South America of about 45 days, Redelivery Skaw-Cape Passero range, 5 percent total commission, Laycan 5/10 days in advance. (Route S9 does not contribute towards the BSI or TC Average)

APPENDIX 4(D)

Baltic Exchange Supramax Asia Index

The Baltic Exchange Supramax Asia Index is based on the same description as the above Supramax description:

Route 6 Delivery South Korea/Japan range for a trip via Australia or 50/55 days, redelivery India, 5 per cent total commission. Laycan 5/10 days in advance. (Route S6 does not contribute towards the BSI or TC Average)

Route 7 Delivery Cape Comorin / Haldia range including Sri Lanka for a trip of 20/30 days redelivery China. Cargo basis iron ore or similar with 5 per cent total commission. Laycan 5/10 days in advance (Route S7 does not contribute towards the BSI or TC Average)

Route 8 Delivery China Hong Kong/Shanghai range including Taiwan for a trip via Indonesia with coal of 20-25 days redelivery East Coast India Chennai/ Paradip range, with 5 per cent total commission. Laycan 5/10 days in advance. (Route S8 does not contribute towards the BSI or TC Average)

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APPENDIX 4(E)

Baltic Exchange Handysize Index (BHSI)

The Baltic Exchange Handysize Vessel Description.

28,000 mt dwt self trimming single deck bulkcarrier on 9.78m ssw 169m loa 27 m beam. 5 holds/5 hatches. 37,523 c.um grain 35,762 c.um bale 14 knots average laden/ballast on 22 mt ifo (380) no diesel at sea. 4 x 30 t cranes Maximum age 15 years.

Route 1:

Dely Skaw – Passero for a trip about 35/45 days, redelivery Recalada – Rio de Janeiro range. 5 per cent total commission. Laycan 5/10 days in advance. Weighting 12.5%

Route 2:

Dely Skaw - Passero range for a trip about 35/45 days, redelivery Boston – Galveston range. 5 per cent total commission. Laycan 5/10 days in advance. Weighting 12.5%.

Route 3:

Dely Recalada – Rio de Janeiro for a trip about 35/45 days, redelivery Skaw – Passero range. 5 per cent total commission. Laycan 5/10 days in advance. Weighting 12.5%.

Route 4:

Dely US Gulf for a trip about 35/45 days, via US Gulf or NC South America, redelivery Skaw – Passero range. 5 per cent total commission. Laycan 5/10 days in advance.

Weighting 12.5%

Route 5:

Dely SE Asia for a trip via Australia, about 25/30 days, redelivery Singapore – Japan range including China. 5 per cent total commission. Laycan 5/10 days in advance

Weighting 25%.

Route 6:

Dely S Korea – Japan range for a trip via Nopac of about 40/45 days, redelivery Singapore-Japan range including China. 5 per cent total commission. Laycan 5/10 days in advance

Weighting 25%

APPENDIX 4 (F)

The Baltic Exchange Dry Index

The BALTIC DRY INDEX (BDI) is the successor to the Baltic Freight Index (BFI) and came into operation on 1 November 1999. Since the 1st of July 2009, the Index is a composite of the Capesize, Panamax , Supramax and Handysize Timecharter Averages.

The calculation until the 30th of June 2009 was based on an equally weighted average of the BCI, BPI, BHSI and the BSI index, which superseded the BHMI on 03 January 2006, which superseded the BHI on 2 January 2001.The BDI continues the established time series of the BFI, introduced in 1985.

For the creation of BDI we now use the following formula:

((CapesizeTCavg + PanamaxTCavg + SupramaxTCavg + HandysizeTCavg)/ 4) * 0.113473601 Where TCavg = Time charter average.

The multiplier was first applied when the BDI replaced BFI, and has changed over the years as the contributing indices and the methods of calculation have been modified.

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APPENDIX 4(G)

Baltic Exchange Dirty Tanker Index.

Panellists should submit their best assessment of the Worldscale rates for the following routes:

Baltic Exchange Dirty Tanker Index

BDTI Route 1

280,000mt, Middle East Gulf to US Gulf.

Ras Tanura to LOOP with laydays cancelling 20/30 in advance Maximum age 20 years.

BDTI Route 2

260,000mt, Middle East Gulf to Singapore.

Ras Tanura to Singapore with laydays/cancelling 20/30 days in advance Maximum age 20 years.

BDTI Route 3

260,000mt, Middle East Gulf to Japan.

Ras Tanura to Chiba with laydays/cancelling 15/30 days in advance. Maximum age 15 years.

BDTI Route 4

260,000mt, West Africa to US Gulf.

Off Shore Bonny to LOOP with laydays/cancelling 15/25 days in advance. Maximum age 20 years.

BDTI Route 5

130,000mt, West Africa to USAC.

Off Shore Bonny to Philadelphia with laydays/cancelling 15/25 days in advance. Maximum age 20 years.

BDTI Route 6

135,000mt, Black Sea/Mediterranean.

Novorossiyk to Augusta with laydays/cancelling 10/15 days in advance Maximum age 20 years.

BDTI Route 7

80,000mt, North Sea to Continent.

Sullom Voe to Wilhelmshaven, with laydays/cancelling 7/14 days in advance. Maximum age 20 years.

BDTI Route 8

80,000mt, Crude and/or DPP Heat 135F, Kuwait to Singapore.

Mena al Ahmadi/Singapore with laydays/cancelling 20/25 days in advance Double hull vessel, Maximum age 20 years.

BDTI Route 9

70,000mt, Caribbean to US Gulf.

Puerto La Cruz (Jose Platform TAECJ - Jan 2004) to Corpus Christi with laydays/cancelling 7/14 days in advance. Maximum age 20 years.

Assessment basis - Oil Pollution Act premium paid.

BDTI Route 10D

50,000mt, fuel oil, Caribbean to USAC.

Aruba to New York with laydays/cancelling 7/14 days in advance Double hull vessel, Maximum age 20 years.

BDTI Route 12

55000mt, fuel oil, Amsterdam-Rotterdam-Antwerp range to US Gulf. Antwerp to Houston with laydays cancelling 15/20 days in advance. Double hulled vessels

BDTI Route 14

80000 mt, no heat crude, SE Asia to EC Australia.

Seria to Sydney with laydays/cancelling 21/25 days in advance. Double hull and max 15 years old.

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BDTI Route 15

260000 mt, no heat crude, West Africa to China.

Serpentina FPSO and Bonny off shore to Ningpo with laydays cancelling 20/30 days in advance. Double hull and max age 20 years.

BDTI Route 16

30000 mt fuel oil heat 135 F, Black Sea to Mediterranean, Odessa to Augusta with layday /cancelling 8/14 days in advance. s Double hull and max 20 years.

BDTI Route 17

100,000 mt crude. Baltic to UK-Cont.

Primorsk to Wilhelmshaven (Great Belt laden / ballast) with laydays/cancelling 10/20 days in advance. Double hull. Max 15 years

BDTI Route 18

30000 mt fuel oil Baltic to UK-Cont.

Tallinn to Rotterdam with laydays/cancelling 10/15 days in advance. Double hull. Max 15 years.

BDTI Route 19

80,000mt, cross Mediterranean.

Ceyhan to Lavera with laydays/cancelling 10/15 days in advance. Maximum age 20 years.

TCEs

Time-Charter Equivalent (TCE) assessments for dirty tankers are made up of average dollar pricing conversions for Very Large Crude Carriers (VLCCs), Suezmax and Aframax tankers derived from a range of routes already reported on by the Baltic Exchange and expressed in Worldscale. In addition, TCE assessments for individual routes are also reported.

VLCC

The published VLCC time-charter equivalent is an average of the rates derived from TD1 and TD3.

Suezmax

The published Suezmax time-charter equivalent is an average of the rates derived from TD5 and TD6.

Aframax

The published Aframax time-charter equivalent is an average of the rates derived from TD7, TD8, TD9, TD14, TD17 and TD19.

Individual Routes

Timecharter equivalent assessments are published for the following individual dirty tanker routes: TD1, TD3, TD5, TD6, TD7, TD8, TD9, TD11, TD14 and TD17

The TCEs are calculated using a variable feed of bunker prices supplied by Bunkerworld. Variable exchange rates supplied under licence by XE.com are also used for adjusting port costs. Port charges used in this calculation are provided under licence by Cory Brothers.

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APPENDIX 4(H)

Baltic Exchange Clean Tanker Index

BCTI Route 1

75,000mt, CPP/UNL Naphtha Condensate, Middle East Gulf to Japan. Ras Tanura to Yokohama with laydays/cancelling 30/35 days in advance. Maximum age 12 years.

BCTI Route 2_37

37,000mt, CPP/UNL Continent to USAC

Rotterdam to New York with laydays/cancelling 10/14 days in advance Maximum age 15 years.

BCTI Route 3_38

38,000mt, CPP/UNL Caribbean to USAC.

Aruba to New York with laydays/cancelling 6/10 days in advance.

Maximum age 20 years. Assessment basis - Oil Pollution Act premium paid.

BCTI Route 5

55,000mt, CPP/UNL naphtha condensate, Middle East/Japan

Ras Tanura to Yokohama with laydays cancelling 30/35 days in advance. Maximum age 15 years.

BCTI Route 6

30000mt CPP/UNL Algeria/Euromed Skikda/Lavera with laydays cancelling 7/14 days in advance. Maximum age 15 years.

BCTI Route 8

65,000 mt CPP/UNL middle distillate AG to UK-Cont.

Jubail to Rotterdam with laydays/cancelling 20/30 days in advance. Double hull. Max 15 years. This route to be reported as US$ per mt.

BCTI Route 9

22000 mt CPP/UNL middle distillate Baltic to UK/Cont.

Ventspils to Le Havre with laydays/cancelling 5/10 days in advance Double hull. Max 15 years

Note: All vessels reported to have major oil company approval.

TCEs

Time-Charter Equivalent (TCE) assessments for clean tankers are made up of average dollar pricing conversions for Medium Range (MR) Product tankers derived from a range of routes already reported on by the Baltic Exchange and expressed in Worldscale. In addition, TCE assessments for individual routes are also reported.

MR

The published MR time-charter equivalent is an average of the rates derived from TC2_37, TC3_38 and TC10 (Asia reported).

Timecharter equivalent assessments are published for the following individual clean tanker routes: TC1, TC2_37, TC3_38, TC4, TC7, TC10, TC11 (Asia reported) and TC5

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APPENDIX 4(I)

Baltic Exchange International Tanker Routes – Asia

BITR-Asia Route 4

30,000mt, CPP/UNL Singapore to Japan.

Singapore to Chiba with laydays/cancelling 7/14 days in advance Maximum 15 years.

30000 mt CPP Singapore to East Coast Australia.

Singapore to Sydney with laydays/cancelling 17/23 days in advance. Double Hull max 15 years.

40,000 mt CPP/UNL South Korea to NOPAC West Coast.

S. Korea to Vancouver BC – Rosarito range with laydays/cancelling 14-21 days in advance. Maximum age 15 years, double hull.

40,000 mt CPP South Korea to Singapore. Laydays cancelling 10-17 days in advance.

Maximum age 15 years, double hull, oil major approved.

35,000mt Naptha Sikka (WCI) to Japan

Sikka (Jamnagar) to Chiba with laydays cancelling 7/14 days in advance. Maximum 15 years , double hull, oil major approved.

Note: All vessels reported to have major oil company approval.

TCEs

Timecharter equivalent assessments are published for the following individual BITR-Asia tanker routes: TC10

APPENDIX 4(J)

BALTIC LIQUIFIED PETROLEUM GAS ROUTE

44,000 mt 5 per cent, 1 to 2 grades, fully refrigerated Liquid Petroleum Gas. Ras Tanura to Chiba, laydays 10/40 days in advance. Laytime 96 hours total. Maximum age 20 years.